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Fundamentals

During Monday's (August 14th) Asian session, spot gold oscillated narrowly, and it is currently trading at 1913. Friday night, the U.S. CPI for July rose less than expected, and the initial value of the CCI (from the University of Michigan) in August was better than expected. Although it shows that inflation has been suppressed to a certain extent, the U.S. economic data is better than expected, and the market strengthens the expectation of a soft landing for the U.S. economy. Besides, the Fed officials maintain a hawkish stand, and the market revises the previous expectations of the Fed turning dovish. Thus, the U.S. bond yields continue to climb, boosting the USDX to 103, and setting gold prices under pressure to fall back. Meanwhile, gold remained oscillating at lows, failing to rebound despite several signals of stopping depreciation. Currently, there is a technical bullish divergence, and gold needs a technical rebound to release the accumulated bullish sentiment. Key News: This week, investors should focus on the Fed's monetary policy meeting since the market's bets on a further rate hike are weakened due to poor economic data last week. Also, Fed officials' speeches are important, which may release the direction of further interest rate movements.

Technical Analysis

Daily chart: Gold descended for consolidation under continuous pressure last week. Although there were several stop signals, there wasn't space for a rebound, and the market stayed negative and pessimistic. Regarding the daily chart, gold plunged last week continuously, technically following the trend of the week earlier when the 5-day SMA crossed below the 10-day and 20-day SMAs. At the same time, the bears were heading downwards, resulting in a serious lack of confidence in the gold bulls. Although there are many signs of stopping, it is difficult to rebound to strengthen the gold bulls' confidence. Now, gold may continue to oscillate near 1916. If it gets stable, gold may reach the 10-day SMA near 1927. Currently, there is a technical signal of a bullish divergence, gold is in urgent need of a technical rebound to release the bullish sentiment. But before rebounding, if the USDX continues to strengthen, gold shall further test the support near 1900, which is also an important psychological level, as well as the bottom of the previous trend. Therefore, gold should oscillate weakly at the beginning of the week to confirm the support at the bottom.  

Trading recommendations: Buy lows and sell highs. If gold retraces to 1902 today, investors should go long with small positions, and set the stop-loss at 1897. To take profits, the first target will be the 5-day SMA (1916), where investors should move the stop-loss to breakeven, and the second target will be 1927. However, if gold rebounds to the 5-day SMA (1916) today, investors should go short with small positions. Despite a weak pattern, there is litter space below, and short positions are too risky for conservative investors. For aggressive investors, a small stop-loss must be considered. Additionally, the stop-loss should be set at 1920 and investors should take profits at 1905.

Trading Recommendations

Trading direction: Long

Entry price: 1900

Target price: 1927

Stop loss: 1895

Support: 1900.000/1895.000

Resistance: 1916.000/1927.000